Since the economic stimulus dried up, federal budget deficits have been shrinking, but new numbers from the Congressional Budget Office show that trend is reversing. This year, the deficit will increase in comparison to the size of the economy for the first time since 2009, climbing up to more than half a trillion dollars. That’s about 2.9 percent of GDP, higher than the CBO initially projected.
“The problem that we face is that the most popular programs, entitlements, are driving the growth in spending and therefore the growth in the debt,” said Romina Boccia, an Economist at the Heritage Foundation. But entitlements are not the only issue. According to the CBO, the “increase is largely attributable to legislation enacted since August—in particular, the retroactive extension of a number of provisions that reduce corporate and individual income taxes.”
A recent survey by the Pew Research Center found Americans are less concerned about the deficit, with the issue pushed out of the limelight by things like the overall economy and terrorism.
“So it’s not at the top of their mind when it comes to what they want to see from congress and the president,” said Alec Tyson, a researcher at Pew. “But, what we also know is how quickly views on public priorities can change.”
The full details of the CBO’s deficit calculations are scheduled for release this week.
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?